In this webinar, Ms Vicky Bowman and Ms Pwint Htun discussed the near-term prospects for the economy and people’s lives in Myanmar.
MYANMAR STUDIES PROGRAMME WEBINAR
Monday, 7 June 2021 – In July 2021, the ISEAS Myanmar Studies Programme turned the focus of its current webinar series on the impact of the February 1 military coup in Myanmar to the implications for the country’s economy. Ms Vicky Bowman, Executive Director of the Myanmar Centre for Responsible Business, and Ms Pwint Htun, founder and president of Mobilizing Myanmar, discussed the implications of the military coup on different sectors of Myanmar’s economy – banking, finance, agriculture, and its immediate impacts on the people of Myanmar. Ms Moe Thuzar, co-coordinator of the Myanmar Studies Programme, moderated the webinar which attracted the interest of 174 attendees.
The discussion started with an overview of post-coup Myanmar’s economy. The Purchasing Managers Index (PMI) had been negative throughout the Covid-19 pandemic but improved slightly in May 2021. Still, people’s confidence in businesses remained low. The World Food Programme had recently reported that 3.4 million more people in Myanmar were estimated to go into hunger as a result of the combined economic effect of the coup and the pandemic. In the banking sector, the overall confidence seemed slightly better, with less panic in June than in April/ May. The military had been trying to restore confidence in the banking system to avoid a complete collapse, but some of its actions, such as demanding data on withdrawals from banks, were undermining these efforts. In the real estate construction sector, at least half a million construction workers had lost their jobs since the coup. In the logistics sector, transportation costs were up by 30% due to devaluation of the Myanmar Kyat and disruptions on roads. There were also issues related to fuel and energy.
Turning to the agriculture sector, the State Administrative Council (SAC) seemed to have reverted to some failed policies and agricultural practices of the past. Small-holder farmers still lacked of credit access and thus faced repayment problems. In the garment sector, which was largely hit by both the coup and the pandemic, foreign companies continued to face a dilemma for continuing operations though some had resumed orders in May. The tourism sector was badly hurt; losing 4 million USD over the past six months due to the reduction in international tourism and domestic tourism; this would not recover any time soon. Meanwhile, the SAC had placed a strong focus on domestic production and Special Economic Zones (SEZs). Investors, however, faced the challenge of tax boycotts by employees heeding the call of the National Unity Government (NUG), and several foreign investors were considering the hibernation of businesses. The decision by investors to stay or leave Myanmar depended more on the economic environment than politics, but the return of cronyism, corruption, and lack of transparency under the present political situation had the potential to drive investments out of the country.
The coup had also affected Myanmar’s financial sector significantly. Internet cut-offs had hugely disrupted mobile financial services. With the public losing confidence in the banking system, and mobile money no longer an option, people had reverted to using cash. This had led to long queues for banks and ATMs in the midst of the pandemic. The money in circulation had been severely restricted, as the Central Bank of Myanmar (CBM) had prevented private banks from withdrawing their CBM deposits. The CBM was also unable to print more paper currency due to vendor’s suspension of necessary materials.
Farmers were among the most negatively affected by the coup, due to the devaluation of the Kyat, fiat currency scarcity, and rural credit crunch. Even before the coup, farmers had been facing challenging lives without crop insurance. After the coup, cash scarcity caused the prices of agricultural commodities to fall. At the same time, the Kyat devaluation drove up prices of input materials, such as fertilizers and pesticides. High inflation and disruptions in trade and transport made matters worse, wiping out farmers’ already meagre profits. Furthermore, the rural credit crunch had exacerbated farmers’ dependence on agriculture credit for farming inputs, as they could neither access credit through bank loans or from money lenders. With farmers not being able to obtain seeds, pesticides, or fertilizers, Myanmar’s agriculture sector faced diminishing crop yields over the next few years. Declining yields and fewer profits would force farmers to sell their land and livestock, putting them at the risk of becoming landless. In Myanmar, where agriculture is one of the main foundations of the country’s economy, this would have significant economic repercussions. Jobs disappearing not only from the agriculture sector but also from factories would push more people to consider migrating to neighbouring countries. All this added to the looming humanitarian catastrophe in Myanmar, due to economic hardships that started during the pandemic and which the coup had now compounded.
The general discussion that followed speakers’ presentations further probed questions including pre- and post-coup banking reforms plans, commodities prices, internet cut-offs and mobile payments, the military’s intrusion in the telecommunication sector for surveillance purposes, the impact of farmers facing hardships on more political resistance, impacts on micro, small, and medium enterprises (MSME) and private businesses and their responses, digital payments and cryptocurrency, cash withdrawal limitations and the role of the Central Bank, remittances of overseas workers, and the dominant strategy of investors coping with the situation.